Flexport’s Billion-Dollar Deal: This Rising Tide Can Lift All Boats
Here at CoLoadX, we’ve often talked about the importance of watching the startup world to spot trends in innovation and figure out how you can use technology to grow your business faster. This week the world of ocean freight was floored when relatively new company Flexport raised $110 million of venture capital investment, a transaction that valued the company (post-money) of nearly a billion dollars.
First off, congratulations are in order. Flexport managed to do something quite impressive in building a tech-driven freight forwarding business from inception to a nine- or ten-digit valuation in the span of roughly five years. That’s a tremendous achievement. And since we too are a tech startup in an adjacent space, we know how difficult that is.
While those numbers are impressive, they’re not entirely surprising. Flexport is expecting $500 million in revenue this year. They’re now expanding to invest in physical warehouses to facilitate more efficient management of container capacity. It’s not hard to see why investors would think Flexport can take a meaningful bite out of the trillion-dollar logistics industry.
So what does this mean for freight forwarders who are not Flexport? Are they just the next big Amazon coming to devour independent bookstores? Not by a long shot! In fact, we think this news can actually fuel growth among smaller freight forwarders. Here’s why:
- Freight forwarding is suddenly a hot industry: After years of lurking in the background as an “unsexy” business, the world is coming to realize how important ocean freight is to the global economy. Forwarders are the ones who make sure JC Penney has shirts, Sony has TV’s and Wal-Mart has...well...pretty much everything! Freight forwarders are now being recognized by investors as the most important stakeholders in the world’s logistics process.
- Specialization will favor the little guy: Even as companies like Flexport seem poised to dominate the next wave of ocean freight, we believe there will always be a role for your expertise -- and we think that role will grow, not diminish. You know that no two shipments are the same, and that sometime a “one-size-fits-all” solution doesn’t quite solve what the market needs. Personal relationships matter. Attention to detail matters. You might order a book from Amazon, but you probably wouldn’t trust them to plan your wedding!
- You can now focus on the technology that matters: If you’ve been struggling to figure out which kinds of technology you should be investing in, your decision may have just gotten much easier. Flexport will suit the needs of a certain sector of clients, and it’s probably not worthwhile to compete with them head-on. Rather, you can take a big leap forward by figuring out your unique value proposition and investing in technology to specifically grow the parts of your business that matter the most.
Maybe your next investment in tech means finding a more efficient way to uncover the perfect rate and transit time (yeah, we do that!). Or maybe it just means finding a better way to communicate with your clients. Whatever your priorities, the Flexport investment should serve as an inspiration for all of us in ocean freight. We now have the wind at our backs. As the old saying goes, let’s make sure this rising tide lifts all boats.
By: CoLoadX on Sept. 28, 2017, 2:07 p.m.